The extent and type of marketing you plan for your business will be determined to a large extent by your budget. Although you can do many things cost-effectively, most forms of marketing do cost money. The cost of promoting your product/service will be a consideration to be included in the overall costing and budgeting of your business.
Although advertising and promotion are the biggest items in a marketing budget, they are not the only items. Money also needs to be allocated for market research and staff costs.
Most businesses spend a little more on advertising in the early years, when they need to raise awareness of their existence. Whenever a major competitor opens, it is also important to spend a bit more money to maintain public awareness of your business in the face of all the publicity being given to the new operation.
Although there is no golden rule on how to set a marketing budget, successful operators suggest it is best to begin by identifying what needs to be done, then allocate costs.
As a very general guideline, most established businesses spend about 3-5% of sales on marketing and advertising. New businesses generally spend a little bit more, about 4-6%, and sometimes even more. Having a written budget is extremely useful. Not only does it provide a 12-month schedule, but it also helps you to control your spending and to stay focused on the plan once it is established.
Successful operators suggest allocating the entire budget to specific activities, leaving only a small amount of money – perhaps $500 to spend on unexpected opportunities that may arise during the year. This helps to develop a more disciplined approach to spending the funds and means that you will think carefully before changing plans in response to last-minute offers or proposition from an advertising salesperson.
Write down the main tactics you will be using in your promotional mix, how frequently you will be using each tactic, and the costs (including the cost of production and the price of buying media space). Also note that you should allow some funds for ‘contingencies’, just in case a new opportunity arises or a problem occurs.
Your budget needs to be constantly updated and reviewed. At all stages, you need to be aware of your cash flow and profitability so you can take action if necessary to reduce costs and/or market more aggressively.
Restaurant and Cafe Marketing Budget
Businesses can survive for some time with poor record-keeping, insufficient finance or a lack of management skills, but they cannot survive without a market.
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